Cryptomining the end of homebuilds?

[Rjel]

Been saving up for a new build for a while. I was hoping to get another 2-3 months worth of cash set aside. I'd already resigned myself to the idea I'm not going to be able to afford a top notch 1080 card right now because of price jumps due to cryptomining. So today I read an article online about CPUs likely to see an increase coming because of this fad. I never paid any attention to cryptomining til recently but it's got my attention now. It all seems like such a scam.

 

Do any of you have a better handle on this to offer some insight?

[coconut]

It's not fun seeing the prices rise that much, hopefully they go back down again soon.

 

On the positive side, it might make home PCs more popular again, might bring in some gamers and pilots, who knows... It could also bring more cash to NVidia and AMD, which could be a good thing in the medium and long run.

[Rjel]

I hope you're right coconut. Now I'm trying to decide if it's in my best interest to buy my CPU now to avoid a big increase.

[BeastyBaiter]

Cryptocurrency prices have been dropping steadily since a peak in December. Bitcoin in particular has lost roughly 60% of it's value in that time. The mining craze is over for now but mining is still profitable. I've been part time mining with my gaming rig (specs in sig) and make a little side cash that way. As for CPU mining specifically, my i7-8700k at 4.7GHz and undervolted (see sig) generates about $0.75-0.80 per day for around 60W of power. I also have a Ryzen 5 1600x system (3.9GHz) which generates about $1.00 a day on 55W of power. These are gross figures and do not account for the electric bill, not that 50-60W is a whole lot of money but neither is $1 a day. That brings up the problem with CPU mining, the return on investment time is generally too long to be worth messing with CPU mining. You're better off buying a craptacular celeron and then throwing 1 more GPU on the motherboard with the money saved. In my case, I just happen to have the two CPU's anyways, so why not use them?

 

Edit: you're probably wondering how the slower and far cheaper Ryzen 5 is able to beat the 8700k in both efficiency and total income. The reason is cache size, that's what mining is based on mostly. The more cache you have, the faster you mine. Some youtubers have played with Threadripper CPU mining and the results are pretty funny. Given the price of a threadripper, it isn't at all cost effective. But if you have one sitting around, you can make it basically pay for itself after a year or so.

Edited February 4, 2018 by BeastyBaiter

[dburne]

I think the price rises, at least regarding GPU's is more from third party sellers mainly because of the shortage due to the miners buying them all up.

 

I know EVGA still sells their lineup at regular pricing, only problem is finding them in stock. Best one can do if they want say a new 1080 Ti is to just keep regularly checking the normal retailers and if you see one snatch it up that instant.

 

It is pretty sad what this mining fad is doing to us gamers that just want a good GPU. I am lucky in that I got my 1080 ti several months ago before this craze hit so hard.

[BeastyBaiter]

Same, my 1080 TI cost me $740, the same GPU was $1200 last I checked and that's assuming you could even find one.

[katdog5]

you just have to have patience and wait for now if you were on a planned build. itll end soon im guessing. 1080tis were $800 last month.

[Rjel]

Just for the Hell of it, last night I looked on Amazon at various card prices. Even older cards are ridiculously overpriced right now. I saw a 7xx card that was priced slightly under $500. Buyer beware.

you just have to have patience and wait for now if you were on a planned build. itll end soon im guessing. 1080tis were $800 last month.

I agree. But both upper end Ryzen chips and the i7 8700K are in my price range right now. If they go up a 1/3 or more, I'm not going to be in the market.

Edited February 4, 2018 by Rjel

[Mitthrawnuruodo]

This is rather complicated, and I do not want to pretend that I fully understand. However, I believe that I may offer some information. 

 

Increased demand for graphics cards in December and January (primarily caused by mining) created a severe shortage. Prices increased rapidly because high-end graphics cards were very hard to find for several weeks. 

 

This event is very severe because the extreme price increases are affecting graphics cards not normally associated with mining. The entire range of Nvidia graphics cards has seen increases ranging from 50 to 100%. 

 

This is not the first time we've seen prices spike due to mining. When it happened circa 2014, certain cards were selling almost 100% above MSRP. However, things settled down and prices returned to normal in just a few months. 

 

Therefore, I expect that things will also settle down in the next few months. However, it is possible that prices will not drop all the way to pre-spike levels due to the severity of this shortage. 

 

Current GeForce 10 series products are approaching two years. It's hard to say what will happen when the next-gen GPUs hit the market (likely in a few months). It is possible that prices will remain high when people buy in anticipation of another spike. However, one benefit is that GeForce 10 series cards will certainly become more affordable. 

 

Therefore, I would advise you to avoid purchasing cards at this time. The price spike and the impending release of new GPUs might make a card purchased now for $1000 depreciate very quickly. Naturally, this is a frustration that most want to avoid.

 

However, not all is hopeless. There are other things that can be done while prices are high to make the most of your existing hardware. Adaptive refresh rate technology (G-Sync or FreeSync) and high refresh rate monitors can make a stuttery 45-60 fps appear very smooth. If you have money to spend but don't want to buy overpriced cards, these things are a good investment. 

Edited February 4, 2018 by Mitthrawnuruodo

[Rjel]

After most of the day struggling with the decision to buy now or wait, I decided on buying the i7 8700K. I really like AMD and want them to succeed but right now the Intel chip looks better to me for what I want to do with it. Maybe I'm playing into the hands of those who are driving up prices but even if I waited I can't see this CPU dropping in price drastically in the next few weeks if they were to go down instead of increasing. It'll likely take me a couple more months to get all of the other pieces together before building. My last build was early 2011. I was a little shocked by that but also pretty darned pleased I've kept my system running that long with only minor upgrades, a new power supply and two different nVidia cards along with Win10. It's an AMD Phenom II X6 1100T on an Asus board so it's getting a little long in tooth. It is the longest lived system I've built so far. I've decided to start from scratch again this time, new case and all. I'll keep this older system going for a spare for now.

 

Thanks for the comments.

[Warpig]

After most of the day struggling with the decision to buy now or wait, I decided on buying the i7 8700K. I really like AMD and want them to succeed but right now the Intel chip looks better to me for what I want to do with it. Maybe I'm playing into the hands of those who are driving up prices but even if I waited I can't see this CPU dropping in price drastically in the next few weeks if they were to go down instead of increasing. It'll likely take me a couple more months to get all of the other pieces together before building. My last build was early 2011. I was a little shocked by that but also pretty darned pleased I've kept my system running that long with only minor upgrades, a new power supply and two different nVidia cards along with Win10. It's an AMD Phenom II X6 1100T on an Asus board so it's getting a little long in tooth. It is the longest lived system I've built so far. I've decided to start from scratch again this time, new case and all. I'll keep this older system going for a spare for now.

 

Thanks for the comments.

The 8700k is on Amazon right now for $374.98, which isn't a bad price at all. $360 is the MSRP. I actually paid $415 for mine, so you're in good shape there.

 

Also, what kind of processor do you have from your old build? Sandy Bridge processors have a good resale value. I sold my 2600K for $100 on eBay. I even sold my DDR3 16GB (4x4GB) 1666MHz RAM kit for $75. I probably could have gotten $90-$100 for the kit if I posted it for that. I would have sold my MB, but it had some quirks in that that I didn't want to pass on to another unlucky consumer.

 

Point is: You're old PC parts might offer a nice return in investment. I'm still amazed that the RAM I paid $90 for in 2011, sold for $75 just last month.

Edited February 5, 2018 by Warpig

[Mitthrawnuruodo]

It’s amazing that you can make this much money reselling ancient hardware due to the high RAM and graphics card prices and stagnant CPU performance. I had expected that DDR3 would be relegated to garbage-tier by now. It was shocking to see that 16 GB still sells for around $150.

Edited February 5, 2018 by Mitthrawnuruodo

[Rjel]

I'm planning on using the old machine as a VCR of sorts and for writing. But reselling is an excellent idea. Not to date myself but the first machine I had was a 386sx with a whopping ONE meg of ram. Needed to buy another meg to run LucasArts Their Finest Hour. One meg set me back over $100 in 1990. It still amazes me how computer tech keeps getting better and cheaper at the same time.

[unreasonable]

With a bit of luck this whole cryptocurrency nonsense will be forgotten about soon enough and GPU prices will revert to normal.   It is just a bubble based on Ponzi schemes and fraud, trading on the credulity of young men who resent the power of government to create fiat currency, who spend too much time reading Zero Hedge and fantasizing about the imagined benefits of the Gold Standard.

 

This too will pass.

[BeastyBaiter]

It's a bubble in the sense that the internet thingy was a bubble in the late 1990's. A whole bunch of people bought into something they simply did not understand, drastically inflated prices and then the bubble burst. That doesn't mean there isn't a market for it. Regardless, given the current market correction, we'll be seeing reasonably priced GPU's in the near future.

Edited February 6, 2018 by BeastyBaiter

[unreasonable]

No it is not like that at all. It is more like the market for black tulip bulbs, voodoo dolls or astrology predictions.  I agree that there will still be a market for it, since human folly knows no limitations. The internet actually created a useful product - which was, and for that matter still is - hard to value with any degree of confidence. 

Crypto currencies are not like that.

 

The only rational argument that I have seen that crypto-currencies have a genuine value - apart from the psychological satisfaction of giving a finger to "the man" - is in their usefulness to facilitate black-market transactions. This, like a lock pick or a credit card PIN decoder is only valuable to a criminal. Both have markets, I agree - but not large enough to distort other markets.

Edited February 6, 2018 by unreasonable

[ZachariasX]

Cryptocurrencies are much less FIAT money than the FIAT money made by the FED, any other central bank or (for the largest part!!), by regular banks. You only can have crypto currency, if you "work" for it. This is mining. You can't just write it in the ledger, doing so requires mining. That is why it can have (theoretical) value, as it is kept as a limited ressource. $ is not such. € is not. £ most certainly is not as all the other paper currencies.

 

To illustrate that point, this is how for instance the Swiss National Bank pays for their overhead (infrastructure, salaries, etc.) is by merely entering the sum manually in the cash register and then withdrawing that sum. So with every salary paid, they inrease the total sum of Swiss Francs in existence and thus (theoretically) by inflation let every person owning Swiss Francs de facto pay their salary, even though they never issued them a check. They feel pretty cool about that. So, when the SNB's big kahuna felt like raising his salary to about 1 mio CHF a year (about as many $), and the public as something like "WHAT??", he had the chuzpe stating "Well that doesn't cost you anything". If you have your money managed by people like these, you clearly don't need cryptocurrencies for mad gambling.

 

The problem with crypto currencies is that they can only work, if you enlarge the pool. Doing "accounting" requires mining. And mining as such increases the money pool. This means that not production of "value" is increasing the money pool, exchenging money also increases the money pool, de facto constantly devaluating the currency by inflation. Now, if this inflation is seen in the real world by comparing that crypto currency to another kind of value is a wholly different matter. But the take home message is that cryptocurrency exist only if you constantly make more of it. THAT is why it is a Ponzi scheme. Traditional currenciey volumes are not expanded when doing accounting.

 

As with any other Ponzi scheme, there is also a hard limit when the thing will fall apart. With the "traditional" Ponzi scheme, there's only so little iterations that you can make, before you won't find enough lenders anymore. It traditionally requires exponential growth. Cryptocurrencies grow a bit more linear, this is why they are viable much longer. But even right now, the enegry required for keeping the whole show going is dependent on discounted electricity. Should the Chinese decide to turn of all those stinking coal plants that do nothing but supply energy to all those mining farms that they hate anyway, then all falls apart and your home mining will not save you.

 

Why won't home mining not save you?

 

The problem is not even that the unerlying value is not understood and hence very very volatile. It is so volatile, that you can only use that money for smaller sums if you can convert them in less that 15 minutes. In theory for Bitcoin AFAIK, 10 minutes is what it takes to make a Transfer. To make a payment to your pizza joint, they must require you to pay in at least 15 minutes, else they have no idea what they would get in return for delivering a pizza. To make this transfer, you need the miners as well as the exchange shops. And those are just some dudes buying off your beloved graphics cards with no oversight on whatsoever.

 

Now, imagine, you want to make a payment for your pizza. You issue that order, then it has to wait until a miner finally takes that one and processes it from the queue. If you want $ back from your cryptothingy, this is even more sensible, as guess who will be prioritized in such trades? The Exchange office itself or victims like you? If the value crashes, you will find out that the fees asked to priorize your conversion will rise drastically. This means the big ones will cash out before you, even if you may have given the conversion order before them.

 

In contrast to the National Banks rigging the value of your currency, any criminal with leverage on (or ownership of) an crypto currency exchange can steal from you as he de facto can wait and see what happens and even act ex post, as he simply stalls the other orders.

 

It seems people have not lost enough money yet.

 

Besides that, a distributed ledger is a great idea. But not for such.

 

TL;DR

"Regular" currencies are way more FIAT than cypto currencies. Cryptocurrencies are inded a ponzi scheme. As such, it has a hard limit where it must collapse. This is when the Chinese pull the plug on the mining farms for enviromental (and other good) reasons. Your crypto cash will be gone then, no matter how much are mining yourself.

[ZachariasX]

It is more like the market for black tulip bulbs, voodoo dolls or astrology predictions.

 

 

Black Tulips are both a limited ressource as there is a certain underlying value to it. So are voodoo dolls. Just don't pay an unreasonable price or it (pun intended). Astrology predictions, maybe yes.

 

Using your argument that discouts the use of gold as currency. It has no value then either. There is about as much gold as silver in this world (ore, in the ground), however silver is much cheaper. Why? It is easier to get.

 

For the old Aegyptians gold had not that much of a value (for the chiefs, at least) compared to iron. You find plenty gold with them, but hardly any iron. One of the few iron artifacts is a dagger found with Tutankhamen. That one probably made from a meteorite and was also probably one of the most valuable items in the whole kingdom. Now iron is commodity.

 

The only difference between a currency based on an underlying value and a theoretical one like "money" is that with "money" the state promises to ALWAYS accept it as a mean to pay for state services. If you have that, you have a state. And THAT makes you rich, currency is just a mean for that. If you don't have a state, an UZI is that mch more valuable in a trade than a bag of gold, that the one with the UZI always ends up with the gold and the UZI. And it probably is the end of the libertarian as well.

 

It is of note that the state starts to no longer unconditionally accepts money for their services. Just try to pay your taxes in cash and see what happens.

[ZachariasX]

Just wrote that, then the news:

 

China starting to block Bitcoin sites in their "great firewall" and poooofff, the air is out.

[unreasonable]

I cannot just create money either. Banks can - within their capital limits, set by states.  States have the sovereign power - and willingness - to use any and all resources within their jurisdiction to back their currency, should they choose to do so, which of course is not guaranteed.  Crypto miners have only the credulity of the next mug punter.

 

I have been saying this to my PC literate, libertarian contrarian friend for quite a while. His claim is that they are "worth" at least their energy content. This is the sunk cost fallacy.  

 

There is nothing wrong with the idea of the block chain itself as a technology for tracking transactions - but just as political power grows out of the barrel of a gun, the credibility of a currency grows out of political power. The crypto nerds have neither.

[unreasonable]

 

Using your argument that discouts the use of gold as currency. It has no value then either. There is about as much gold as silver in this world (ore, in the ground), however silver is much cheaper. Why? It is easier to get.

 

 

 

Gold has no value as a currency now, any more than lead.  It was useful for trade once, since it was useful as a commodity - as jewelry - but also sufficiently rare to be convenient for transactions against other common bulkier items, (such as slaves), but not so rare that it could not be found. (Except in China, where silver was preferred, I believe). It also had the useful properties of being almost immune to being tarnished, eaten by insects etc. In other words, it just happened to hit the spot in terms of convenience. (And of course we find it very beautiful).

 

edit: put it another way: when people trade using gold coins (or silver) and care about the metal content what they are actually doing is a form of barter. It just so happens that some king or queen "guarantees" the metal content when they mint coins, just as government official might put a quality stamp on barrels of beer. Once no-one cares any more about the metal content - because you have alloy coins or paper money - or electronic transactions - all you have left is a unit of account: a way of measuring 10 barrels of beer against a coffle of slaves against a land plot etc...

 

The convenience of gold is now gone, and gold is just another commodity no more "intrinsically" valuable than lead or water. It is indeed a "barbarous relic".  But as a commodity it's price is set by it's use and the long term floor is the replacement price. Same as oil. Supply and demand may swing away from that price point but will encourage the mining of new supplies - or the halt in  mining - swinging the price back to (and usually past) equilibrium. This is not true for cryptos - they have zero use except as a currency, consequently the cost of producing them is irrelevant over any time scale.

Edited February 6, 2018 by unreasonable

[ZachariasX]

Banks can - within their capital limits, set by states.

 

Actually, banks can do that on their own. About 80% of all FIAT money is made by common banks that activate assets in their accounting and use this as base to leverage credit. Yes, they do so while following regulations, but that's the difference between a bank and a pawn shop.

 

 

His claim is that they are "worth" at least their energy content.

 

[ZachariasX]

 

 

This is not true for cryptos - they have zero use except as a currency, consequently the cost of producing them is irrelevant over any time scale.

 

The costs producing them are relevant, becuase you pay your electricity on local currency. If your Ponzi scheme fails to attract enough victims for you to convert crypto back to local currency to pay for your electricity bill, then that's the end of it. Crypto mining is very senstive to producting costs, as it not only stops the money pool from growng but also it stops it from functioning, essentally it ceases to exist.

[unreasonable]

Actually, banks can do that on their own. About 80% of all FIAT money is made by common banks that activate assets in their accounting and use this as base to leverage credit. Yes, they do so while following regulations, but that's the difference between a bank and a pawn shop.

 

 

 

 

Yes I know it is laughable, but much of this fad is.

 

On the first point: banks can only expand their credit lines and deposits according to their capital base and their permitted leverage. I know they constantly try to find ways around this, but the limitations are there nevertheless. They cannot create unlimited money, unless they are allowed to operate at unlimited leverage.

 

 

The costs producing them are relevant, becuase you pay your electricity on local currency. If your Ponzi scheme fails to attract enough victims for you to convert crypto back to local currency to pay for your electricity bill, then that's the end of it. Crypto mining is very senstive to producting costs, as it not only stops the money pool from growng but also it stops it from functioning, essentally it ceases to exist.

 

Commodities - including gold - are actually useful, so replacement cost is a good long term guide to future average prices since you can be reasonably confident that people will continue to use them if it makes economic sense at whatever the replacement cost happens to be. Crypto currencies have no use - except as currencies - so their cost is only a guide to their value in the same sense that the cost of buying a gun is a guide to it's value before going to rob a bank.

 

Anyway, I suspect we actually agree about most of this stuff at a fundamental level, so let's just see how it pans out.

[katdog5]

fiat banks, the most powerful entity on planet earth will make sure there's a ceiling to cryptos ever going anywhere.

 

https://finance.yahoo.com/video/bitcoin-crashes-credit-card-companies-180737541.html

[BeastyBaiter]

I don't think banks believe crypto is any real threat to them in the sense that crypto will conquer the world. Their concern is idiots piling on unpayable amounts of debt speculating on it. If I were running a bank, I'd discourage credit purchases of it too and I happen to believe in crypto.

[Archie]

'There was a story running in the press here, a guy 'invested' 31k in bitcoin, saw it go up in value to 600k and is now back down to 130k or so. Much as I hate what crypto is doing to hardware prices, I wish I had bought in when they were a dollar or so each!

[BeastyBaiter]

I wish I had bought $20 worth a bitcoin (or mined it) when I first heard of it. I took it as a scam and ignored it though. If I had acquired $20 worth back then, I could have sold it for tens of millions over the past couple months. But as said, I took it as a short term scam. I'm not willing to "invest" money into bitcoin or any altcoins still, but I have added another GPU for mining. I figure I'll make that money back no matter what and I can do a few days of mining on some of the newer, unknown coins on the side. If they ever turn into something, there's the easy millions. If not, I lose a couple bucks of electricity. Oh, and sorry for contributing to the GPU shortage. I only bought 1 extra though, and it's a reference design. You don't want that hairdryer next to you anyways!  

 

On a related note, I don't think GPU prices are coming down anytime soon. Even if crypto totally crashes, the memory shortage caused by smartphones will keep GPU's extra expensive. Both AMD and Nvidia are bumping their MSRP's up because of this. We aren't talking about $4-5 either, more like $30 extra cost for AMD/Nvidia themselves. And that means about $100 for us after going through the retailers and middlemen.

[Rjel]

If anyone thought this market is stabilizing, think again. I just bought this card four days ago for $279. Compared to a few months ago, that was overpriced. What you see is unbelievable. I should have bought three more to resell. I could've paid for my new build. Just saw some 1080s at over $1400. Absolutely ridiculous. I'll never be able to afford one at that price. Well, maybe if I sell a kidney or some other vital organ.

 

Graphics card by Rick Miles, on Flickr

[dburne]

If anyone thought this market is stabilizing, think again. I just bought this card four days ago for $279. Compared to a few months ago, that was overpriced. What you see is unbelievable. I should have bought three more to resell. I could've paid for my new build. Just saw some 1080s at over $1400. Absolutely ridiculous. I'll never be able to afford one at that price. Well, maybe if I sell a kidney or some other vital organ.

 

 

You just got to find one in regular retail stock, it will be at a normal price rather than this crazy price gouging third party sellers are doing. And when you do, click the buy button pretty darn quick.

Nvidia nor their partners have jacked the prices, it is the third party sellers.

 

EVGA posts when stock is available directly from them on their forums fairly regular. It just goes really quick.

Edited February 11, 2018 by dburne

[Sokol1]

 

 

 

[Rjel]

You just got to find one in regular retail stock, it will be at a normal price rather than this crazy price gouging third party sellers are doing. And when you do, click the buy button pretty darn quick.

Nvidia nor their partners have jacked the prices, it is the third party sellers.

 

EVGA posts when stock is available directly from them on their forums fairly regular. It just goes really quick.

I understand. Who would have ever imagined something a simple as buying a graphic card would end up being like bidding on an Ebay auction?

[Mitthrawnuruodo]

As of 10.02.2018, it seems that prices have dropped significantly. https://pcpartpicker.com/trends/price/video-card/

 

Of course, the cards are still very expensive. 

[BeastyBaiter]

$320 GTX 1060 6GB, been available at least 2 days: https://www.newegg.com/Product/Product.aspx?Item=N82E16814137095

Second cheapest GTX 1060 6GB is $420 though, I bought that exact model for a mining rig a last week for $330. Also, terrible card for gaming, thing is as loud as a hair dryer. Linky: https://www.newegg.com/Product/Product.aspx?Item=9SIA24G4T52158

Edited February 11, 2018 by BeastyBaiter